Bernie Madoff. Matthew Hutcheson. Mark Spangler. If these names don't ring a bell, you are lucky. Reports indicate that thousands of investors lost billions in savings—in some cases an entire lifetime's worth—investing with these financial planners, investment advisers or "retirement coaches" who were accused of breaking the law and taking their money.

The federal regulators whose job is to enforce the law and protect investors from bad actors often had no clue or took no notice of what was going on right under their noses until it was too late. A bipartisan bill now moving through Congress could prevent such losses in the future by giving financial advisers a mandate to regulate themselves.

While average American investors may not fully understand the different titles that investment professionals use, they assume there is government oversight protecting their savings from fraud. And indeed, when you contract with a licensed broker-dealer to buy and sell stocks or commodities, there is a reasonable level of oversight, as broker-dealers face examinations of the accounts they manage on a regular and consistent basis.

But the average investment adviser—who isn't registered as a broker and thus doesn't buy or sell stock—can expect to be examined only once a decade. Even worse, the Securities and Exchange Commission (SEC) reports that almost 40% of investment advisers have never been examined, or audited, meaning more Madoff-type Ponzi schemes could be afoot, and no one will know until investors are harmed.

The investing public deserves better oversight of these professionals to whom they have entrusted their money and, in many cases, their retirement future.

As part of the Dodd-Frank financial-reform legislation, Congress and the administration directed the SEC to study the problem of inadequate investment adviser oversight. When the study was released in January 2011, SEC Commissioner Elisse Walter said that "For far too long, in the investment advisory area, the Commission has been unable to perform its responsibilities adequately to fulfill its mission as the investor's advocate, and investment advisory clients have not been adequately protected. This must change."

But the commission reported in the study that it "will not have sufficient capacity in the near or long term to conduct effective examinations of registered investment advisers with adequate frequency." So it recommended a self-regulatory organization (SRO)—in this instance a self-funded organization set up by the financial advisory industry to regulate itself—as one way to increase examinations.

Responding to Commissioner Walter's call to action, Rep. Carolyn McCarthy (D., N.Y.) and I have introduced the Investment Adviser Oversight Act to increase the frequency of examinations for retail investment advisers. The bill authorizes the establishment of one or more SROs to supplement the SEC's ability to examine investment advisers. This is the most practical way to address the weakness in the system.

Understandably, many investment advisers are not excited about increased oversight, so their lobbying organizations have come out against our bipartisan bill. But whenever fraud occurs and investors are harmed, outrage, bewilderment and astonishment follows and members of Congress—and the public—then ask, "Why is no one enforcing the law?" Our bill will make sure the law is enforced.

Opponents recently offered the proposal that investment advisers be required to pay a fee to the SEC that would be used to increase the number of exams. But the SEC has informed Congress that even if it received increased funding this year, it would be able to examine only one in 10 investment advisers annually. This is unacceptable.

Additionally, this approach ignores the SEC's poor track record leading up to the financial crisis. The SEC failed to protect investors and detect fraud even though evidence about the Madoff and Stanford Ponzi schemes was handed to them by insider informants on a silver platter.

I see no way to deter bad actors and to protect American investors without increased oversight. Who conducts those examinations and how is still open for debate, and I urge all interested parties, especially the investing public, to join this debate.

The risk of another Madoff scandal ought to be a sobering thought not only for Congress and the investing public, but for the investment-adviser industry as well. It is in their best interest that we work together to reach consensus.